Access to Insurance Initiative A global programme for sound regulatory and supervisory frameworks How the Access to Insurance Initiative contributes to financial inclusion 25 April 2013, Panama City XXIV Annual ASSAL General Meeting Martina Wiedmaier-Pfister, Policy Adviser to A2ii on behalf of German Federal Ministry for Economic Development and Cooperation (BMZ)

2 The Initiative  Joint programme of 10 international development agencies and IAIS (International Association of Insurance Supervisors)  Unique relationship triggers the reforms in regulation and supervision required for the development of inclusive insurance markets

3 Rationale of the Initiative  Policy makers increasingly commit themselves to improve access to financial services for the poor (G20/ GPFI)  Regulatory and supervisory frameworks are not yet conducive for spurring access to insurance  Supervisors strive to facilitate insurance for the underserved and its product lines, suppliers and clients  Strengthening institutional and regulatory capacity is essential to improve access to insurance

4 Dimensions of Financial Inclusion Impact at household and firm level AccessUsageQuality From: World Bank Financial Inclusion strategic Framework for GPFI IAIS Application Paper para 1.9. “Financial inclusion” refers to a state in which all working age adults have effective access to credit, savings, payments, and insurance from formal providers. (Global Partnership for Financial Inclusion) “Effective access” involves convenient and responsible service delivery, at a cost affordable to the customer and sustainable for the provider, with the result that financially excluded customers use formal financial services rather than existing informal options [1]

5 Phase 1 of the Initiative  International dialogue events  Thematic research  Synthesis project  IAIS Issues papers  IAIS Application papers  Toolkit on self-assessment  Cooperation with IAIS committees  Country diagnostics  Stakeholder processes  Implementation projects  Toolkit development  Access themes in the ‘G20 ‘Financial Inclusion Process’ and SSB Workstream  IAIS-Microinsurance Network-Joint Working Group 4 – Advocacy and International Platforms 2 - Undertaking country projects 3 - Contributing to IAIS standard-setting 1 – Building knowledge and learning Conducive policy and regulatory environment ↓ Improved access to insurance Capacity Development

6 Achievements

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9 IAIS Application Paper Inclusive Insurance Background: ICPs apply to supervision in all jurisdictions and business lines; however, certain supervisory requirements and actions need adjustment in accordance with the nature, scale and complexity of the risks posed by the individual insurer (“proportionality principle”) Five interrelated issues: Formalisation of informal providers / use transitional arrangements Facilitation of innovations that overcome barriers to access Proportionate application of ICPs (nature, scale and complexity) Allocation of clear roles and responsibilities Considerations for a definition See: IAIS Application Paper on Regulation and Supervision supporting Inclusive Insurance Markets (Oct. 2012) Achievements

10 Current Projects Component 1: Country Diagnostics, Dialogue and Private- Public Consensus Component 2: Development and Implementation of Regulatory Road Maps Component 3: Learning, Communi- cating and Catalyzing Four-country project in Latin America  Peru  Colombia  Jamaica  Brazil A2ii and

11 Current projects Global projects in 2013: Financial Inclusion Training module Self-assessment and peer-review on regulation and supervision supporting inclusive insurance markets Thematic notes on a) business models/intermediation and b) current regulatory approaches Impact assessments of regulatory reform Contributions to Financial Inclusion Subcommittee of IAIS (Issues Paper Market Conduct, Distribution and Consumer Protection)

12 Thematic Note on business models NameDescription of modelExamples 1. Individual salesOne on one sales through fulltime insurance agents or brokers, including outbound call centres; can be supported by in-bound call centres; no client aggregator involved SINAF Seguros, Grupo Villa (Brazil), Metropolitan REI (South Africa) 2. EmbeddedInsurance policy conditional upon or directly linked to another service, such as credit, savings or mobile telephony, with which it is jointly marketed Credit life; MNO loyalty schemes Banca Caja Social, TIGO BIMA (Tanzania) 3. CompulsoryInsurance required by regulation.Third party motor vehicle insurance Social health insurance 4. Cross-sellingInsurance sold to existing clients of non- insurance entities; active sales persons involved Bancassurance; retailer sales; Casas Bahia; Codensa Mapfre

13 Thematic note on business models NameDescription of modelExamples 5. Group decisionMembers of a group become policyholders by virtue of group rather than individual decision; collective negotiation; universal or opt-in Labour unions, PASI, China village model; cooperatives; Association of Tanzania busdrivers 6. Self-helpGroup of persons pool own risksPhilippines MBAs; funeraria and cooperatives 7. Public provisionGovernment purchases insurance on behalf of class of citizens; premium subsidy + commercial underwriting Health insurance in India; disaster risk in rural China 8. Passive aggregatorsIndividual purchases insurance without intervention of sales person Internet sales; Pep/Hollard

Phase 1: first 3 years: awareness raising, knowledge gathering and dissemination- knowledge hub PLAN: A2ii becomes an implementation partner to IAIS on access to insurance Phase 2: toward sustainability: producing and enabling the use of knowledge supervisors need- supervisory support 14 New Strategy Phase 2

Proposed Mission/Vision: We are the implementing partner of the IAIS to increase access to insurance. We inspire and support supervisors to promote inclusive and responsible insurance, reducing vulnerability.  The Initiative aims to increase access and usage of insurance by 10 % in IAIS member jurisdictions and beyond, over a period of 6 years  To achieve this the Initiative will set up a supervisory support facility of USD 50 million New Strategy Phase 2 15

IAIS/A2ii partnership will make the insurance sector stand out as the globally leading model for promoting financial inclusion  Many IAIS members have high levels of financial exclusion making financial inclusion a fundamental priority for IAIS  IAIS has an established process of implementation of its standards but lacks the resources to offer supervisory support to its members New Strategy Phase 2 16

Supervisory Cooperation Support cooperation between supervisors through MMoU, Repository of Supervisory Colleges, etc. IAIS STANDARD SETTING Assessment Self Assessment and Peer Review, Surveys (eg Supervisory Development Survey), Input from regional coordinators and implementation partners (eg FSI, A2ii) Assessment Self Assessment and Peer Review, Surveys (eg Supervisory Development Survey), Input from regional coordinators and implementation partners (eg FSI, A2ii) Supervisory Development and Capacity Building Targeted seminars, training material, leveraging partners Supervisory Development and Capacity Building Targeted seminars, training material, leveraging partners Ongoing Monitoring Targeting monitoring of implementation activities and progress. Ongoing Monitoring Targeting monitoring of implementation activities and progress. Feedback to Standard Setting Activities Financial Inclusion Support application of ICPs for inclusive markets linked with IAIS Standard Setting and Implementation. Direct link with A2ii New Strategy Phase 2 17

Discussion on cooperation ASSAL members and A2ii  Cooperation between A2ii and ASSAL members on new strategy  Invitation to participate in A2ii projects:  IAIS self-assessment and peer review  Financial Inclusion Training Module  Others (impact, synthesis) Discussion 18

19 Thank you for your attention!